Bullion metal prices ended lower on Wednesday, 22 May 2013. Gold was first supported and then pressured by the latest news to come from the U.S. Federal Reserve. Prices were also pressured by a firmer dollar as investors looked for more cues from the U.S. Federal Reserve on the timing of a pullback in the central bank's stimulus policy.
Gold for June delivery ended lower by $10.2 (0.6%) at $1,370.1 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday. Gold rose above $1,400 following Bernanke's testimony but that was in electronic trading.
July silver ended higher by $0.02 cents (0.1%) at $22.47 an ounce on Wednesday.
The market place, including the gold and silver markets, were buffeted Wednesday by Federal Reserve Chairman Ben Bernanke's prepared text and speech on the economy and monetary policy before the Congress. Bernanke in his prepared text before actually speaking to Congress led the market place to believe he wants the present bond-buying program (QE3) to continue in the coming months. However, in a reply, Bernanke answered that the bond-buying program could be tapered as soon as the next couple of FOMC meetings, which would take place this summer.
Gold rallied to the session high on the release of Bernanke's prepared text, but then quickly sold off when the Fed chief mentioned that tapering is possible. Gold prices had been holding moderate gains ahead of the Bernanke speech to Congress.
The Wednesday afternoon release of the Fed's FOMC meeting minutes from six weeks ago was a mixed bag, with some FOMC members wanting to end QE3 sooner and others wanted to extend it for quite some time to come. The minutes also noted the improvement in recent U.S. economic data. Gold prices weakened further following the FOMC minutes' release.
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In the currency market, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, rose by 0.5%.
The Bank of Japan at its regular meeting on Wednesday made no major changes to its monetary policy, which was what the market place expected. The BOJ said the Japanese economy is starting to improve. The Japanese yen resumed its descent on the BOJ news. On Thursday, there will be key manufacturing data out of China released, which will also garner close market attention
Regarding economic data expected at Wall Street on Wednesday, existing home sales improved modestly in April, but still fell short of the 5.00 million barrier. Sales increased to 4.97 million from an upwardly revised 4.94 million (from 4.92 million) in March. The consensus expected home sales to increase to 4.98 million. Also of note, the weekly MBA Mortgage Index fell 9.8% after declining 7.3% in the prior week.
At the MCX, gold prices for June delivery closed lower by Rs 147 (0.6%) at Rs 25,963 per ten grams. Prices rose to a high of Rs 26,677 per 10 grams and fell to a low of Rs 25,902 per 10 grams during the day's trading.
At the MCX, silver prices for July delivery closed higher by Rs 56 (1.3%) at Rs 43,226/Kg. Prices opened at Rs 43,202/kg and rose to a high of Rs 44,600/Kg during the day's trading.
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